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Final Rules Issued on IRS Disclosure of Tax Return Information Under Health Care Law

The
IRS issued final regulations about how it will release certain
tax return information to the Department of Health and Human
Services (HHS), as required by 2010’s health care legislation
(T.D. 9628). The final regulations, which
will be effective Wednesday, describe certain items the IRS
will disclose in addition to those required by Sec.
6103(l)(21). The final rules adopt the proposed rules issued
last year with two changes (REG-119632-11).

The Patient
Protection and Affordable Care Act, P.L. 111-148, required HHS
to establish a program under which affordable insurance
exchanges can determine whether individuals are eligible to
enroll in qualified health plans under the exchange and are
eligible for other benefits under the health care acts. Sec.
6103(l)(21) permits the IRS to disclose to HHS certain tax
return information to help the exchanges determine taxpayer
eligibility where income verification is required.

Sec. 6103(l)(21) identifies specific items of return
information that will be disclosed and permits disclosure of
other items prescribed in regulations. The statutory items
include the taxpayer’s identity and filing status, the number
of personal exemptions claimed, and the taxpayer’s modified
adjusted gross income (MAGI).

Under the final
regulations, items the IRS will disclose include adjusted
gross income, any amount excluded under Sec. 911, tax-exempt
interest, the fact that the taxpayer did not have a filing
requirement for the year, and the fact that the taxpayer did
not file a return for the year reconciling advance payments of
the Sec. 36B premium tax credit with the amount of the premium
tax credit available for the year. In response to information
the IRS received from HHS that the Social Security
Administration (SSA) would be providing the total amount of
Social Security benefits a taxpayer receives, the IRS added to
the list of items required to be disclosed the amount of the
taxpayer’s Social Security benefits that are included in
income under Sec. 86. This information will allow exchanges to
determine a taxpayer’s MAGI.

The second change from the
proposed regulations was to eliminate a reference to adoption
taxpayer identification numbers (ATINs) from the list of
identification numbers being verified by the SSA because the
SSA has no record of ATINs and will not verify those numbers.

State audits of abandoned and unclaimed property (AUP) have exploded in recent years. This report outlines the escheat process, common types of AUP, how different states are handling it and how companies can plan for potential audits and liabilities.

Don’t get lost in the fog of legislative changes, developing tax issues, and newly evolving tax planning strategies. Tax Section membership will help you stay up to date and make your practice more efficient.